MNI STATE OF PLAY: Thai CB Wary Of Baht Volatility

Thailand's central bank is relying on its new foreign exchange "eco-system" to address what it says is a volatile baht impacted by monetary policy in developed economies and uncertainty in the Thai recovery outlook.

The comments are made in the Bank of Thailand's statement on Wednesday announcing that, as expected, the central bank will maintain its one day repurchase rate at 0.50% in what was a unanimous decision by the Monetary Policy Committee.

NEW BAHT ECOSYSTEM

On the baht, which has swung in a range from under 30 to the USD to around 33 this year, the BoT said was closely monitoring developments, and would look to the new ecosystem developed late last year, see: MNI STATE OF PLAY: Thailand CB Banks On Recovery In Rate Views.

This comprises measures to liberalise the holding of foreign currency by Thais, support for a more competitive market among FX providers and the increased the use of hedging tools by Thai businesses, including small and medium sized companies.

THE NEXT DIRECTION UP

The BoT said the economy had "bottomed out in the third quarter" and was now in a recovery phase as the economy re-opens and international tourists return, but a rebound is fragile and subject to uncertainties.

On inflation, which rose to 2.38% in October and is in the BoT's 1% to 3% target range, the bank said that headline inflation could increase temporarily but was expected to be within the target range this year.

There was no update today on the BoT's growth forecasts, which were revised in September back to the earlier forecast of 0.7% for 2021 and 3.9% for 2022.